Maruti Suzuki, the market leader in passenger cars, is planning to offer heavy discounts on its products to clear up its inventory. This move is being made considering the slowdown in car sales as well as the upcoming implementation of Bharat Stage-VI.
Shashank Srivastava, Executive Director of Marketing and Sales in Maruti Suzuki India told CNBC-TV18 on the sidelines of SIAM Convention, "We were doing aggressive production cuts, which is the reflection of retail and it is a continuous exercise done even in normal situations. Depending on retails, it is a prudent practice to adjust for inventory both in-network as well as the factory."
He added that the heavy discounts were a reflection of their attempt to try and push retail since inventory at both network and factory levels were high.
According to reports, there are discounts of up to Rs 1.3 lakh offered on Maruti Suzuki S-Cross, while Maruti Suzuki Ciaz and Baleno are offered on up to Rs 95,000 and Rs 85,000 offs. Maruti Suzuki Ignis is being rolled out on Rs 75,000 off. Discounts will vary from city to city.
Srivastava also highlighted the fact that customers are unsure of going for a BS-IV diesel variant since its future is not as clear because of the upcoming implementation of BS-VI.
Maruti Suzuki has decided to shut operations at its Gurugram and Manesar plants on September 7 and 9. The company has said that "both days will be observed as no production days". The company has not mentioned a specific reason for shutting down the plants.
The automobile industry has been at the receiving end of the persistent slowdown. All auto companies, including the ones that make heavy commercial vehicles and auto-part manufacturers have been hit by the slump. Major carmakers, including Maruti Suzuki India, Hyundai, Mahindra and Mahindra, Honda and Tata Motors reported a double-digit de-growth in August sales.
Following the dismal quarterly figures, auto industry body SIAM has urged the government to cut the GST rate on auto from 28 per cent to 18 per cent. "The ability of the industry to provide large discounts is limited and this only highlights the need for Government to consider reducing the GST rates from 28% to 18% which would significantly reduce the cost of vehicles and in turn create demand," said SIAM President Rajan Wadhera.